COUNTY COMMISSIONER VOTING ON DRI AMENDMENT WHERE HIS WIFE HAS VARIOUS RELATIONSHIPS WITH PARENT COMPANY AND CORPORATE SIBLING OF COMPANY SEEKING THE AMENDMENT

To:Mr. Mark Herron, Attorney (Tallahassee)

SUMMARY:

A county commissioner would not be prohibited from voting on a DRI amendment where the company seeking the amendment is owned by the same company which owns the bank employing the commissioner's wife, where the commissioner's wife is a corporate secretary for the parent company, and where the commissioner's wife owns stock in the parent company through her employer's retirement plan.Voting on the DRI amendment will not inure to the special private gain of either the county commissioner or his wife, as the effect on her stock ownership interest would not be "special" and is "remote and speculative."

QUESTION:

Would a voting conflict of interest be created were a county commissioner to vote on a DRI amendment sought by a company which is a wholly-owned subsidiary of a company that lists the commissioner's wife as a corporate officer, where the commissioner's wife is employed by another wholly-owned subsidiary of the same corporate parent, and where the commissioner's wife owns stock in the corporate parent through an employer-sponsored retirement program?

Under the circumstances presented, your question is answered in the negative.

In your letter of inquiry and other information you provided to us, we are advised that this opinion is sought on behalf of . . . , a member of the Bay County Board of County Commissioners.You advise that the County Commission will be voting upon an amendment to a DRI which would amend the existing DRI with respect to four parcels and permit the applicant to construct three mid-rise condominium buildings.The wife of the County Commissioner seeking this opinion is employed as an officer in a bank which is a wholly-owned subsidiary of a corporation, where another wholly-owned subsidiary of the same corporation is the applicant seeking the DRI amendment.You also advise that the County Commissioner's wife is listed as an "assistant secretary" in the parent company's corporate documents and that through her employment with the bank, she is a participant in the parent company's retirement plan, a defined contribution plan with approximately 1,152 participants.You further advise that the retirement plan owns 7.72 percent of the outstanding stock in the parent company,[1] and her account is credited with 0.04 percent of that outstanding stock.You question whether these circumstances create a voting conflict of interest for the County Commissioner.

Section 112.3143(3), Florida Statutes, provides:

No county, municipal, or other local public officer shall vote in an official capacity upon any measure which would inure to his or her special private gain or loss; which he or she knows would inure to the special private gain or loss of any principal by whom he or she is retained or to the parent organization or subsidiary of a corporate principal by which he or she is retained, other than an agency as defined in s. 112.312(2); or which he or she knows would inure to the special private gain or loss of a relative or business associate of the public officer. Such public officer shall, prior to the vote being taken, publicly state to the assembly the nature of the officer's interest in the matter from which he or she is abstaining from voting and, within 15 days after the vote occurs, disclose the nature of his or her interest as a public record in a memorandum filed with the person responsible for recording the minutes of the meeting, who shall incorporate the memorandum in the minutes.

Section 112.3143(3) prohibits a local public officer from voting in certain situations, including when the matter he is voting upon inures to his special private gain or loss or to the special private gain or loss of a relative."Relative" is defined in Section 112.3143(1)(b) to include one's wife.

You have indicated that the County Commissioner is a full-time Commissioner and is not otherwise employed.Nothing indicates that voting on the DRI amendment would inure to his special private gain or loss.The question, then, is whether voting to amend the DRI would inure to his wife's special private gain.

"Special gain" turns in part on the size of the class of persons who would be affected by a vote and, in part, upon whether the gain would be "remote and speculative."In CEO 99-13, we opined that no voting conflict was created where a city commissioner who owned stock in the parent company voted on a matter involving its wholly-owned subsidiary.Although in that opinion the parent company was a large, publicly traded corporation and here the parent company is a closely-held corporation that is not publicly traded, we do not believe that distinction is significant, chiefly because both the city commissioner in CEO 99-13 and the spouse's retirement account here own only a nominal amount of stock given the total number of outstanding shares.

In CEO 01-8, we reviewed our "size of the class" precedent and repeated that oft-quoted principle:

Where the class of persons is large, we have concluded that 'special gain' will result only if there are circumstances unique to the officer under which he or she stands to gain more than the other members of the class. Where the class of persons benefiting from the measure is extremely small, we have concluded that the possibility of 'special gain' is much more likely. [citations deleted.]In other words, we have long held that when a measure affects a class of sufficient size, the gain is of a 'general' nature and thus is not the 'special' gain addressed by the voting conflicts law.

We also typically have concluded that no voting conflict was presented in situations where the interests of the public official involved one percent or less of the class.

Therefore, based upon the total number of outstanding shares of the parent company's stock (4,510,155 shares), the amount of stock owned by the plan (348,177 shares), the number of participants in the parent company's defined contribution plan (1,152 participants), and the amount of stock held in the wife's retirement account (1,925 shares), even if the amendment to the DRI affects the value of her account, we do not view it as "special" under the voting conflicts law.

Even more significantly, however, we view the potential impact of the DRI amendment on the value of her stock to be remote and speculative.Our "remote and speculative" precedent was also reviewed in CEO 01-8, where we repeated that we had found no special private gain to exist in situations where there was uncertainty at the time of the vote as to whether there would be any gain or loss to the public officer.Here, it cannot be predicted with any certainty that the value of the parent company's stock will concomitantly increase if its wholly-owned subsidiary is successful in obtaining its DRI amendment and that any increase in stock value will be realized by the Commissioner's wife when she either retires or elects to withdraw her retirement benefits early.Under the current DRI, the developer is already allowed to build 70 condominium units, and while the proposed amendment apparently seeks to increase that number to 136, how that change would affect its parent company's stock and, ultimately, the Commissioner's wife is not manifest.Thus, under our precedent, it cannot be said that voting on the DRI amendment would violate Section 112.3143(3), Florida Statutes.

Accordingly, under the facts presented, we find that the subject County Commissioner is not prohibited from voting on the DRI amendment sought by an applicant, where his wife is employed by a bank which is owned by the same company owning the applicant/developer, and where his wife is a corporate officer of the parent company and owns stock in it through her participation in her employer's retirement plan.We also are of the opinion that the County Commissioner may abstain from voting on the DRI amendment pursuant to Section 286.012, Florida Statutes, which permits a member of a county commission to abstain from voting when "there is, or appears to be, a possible conflict of interest under the provisions of s. 112.311, s. 112.313, or s. 112.3143."

ORDERED by the State of Florida Commission on Ethics meeting in public session on September 6, 2001 and RENDERED this 11th day of September, 2001.

__________________________

Ronald S. Spencer

Chair

[1]The parent company is a closely-held corporation with 4,510,155 shares of common stock outstanding; the retirement plan owns 348,177 shares of that stock; there are 1,152 eligible participants in the plan; and the spouse's account holds 1,925 shares.